CCCEU Statement on the European Commission's Guidelines on the Foreign Subsidies Regulation (FSR)

Calling for Evidence-Based and Procedurally Fair Enforcement to Uphold a Genuine Level Playing Field

The FSR Must Not Become a Sword of Damocles Hanging over Chinese Enterprises

9 January 2026, Brussels

The China Chamber of Commerce to the EU (CCCEU) has taken note of the European Commission's publication on 9 January of the Guidelines on the Foreign Subsidies Regulation (FSR).

We acknowledge that some constructive feedback has been incorporated. For instance, the Guidelines provide welcomeclarifications on certain technical details, such as narrowing the definition of "engaging in an economic activity in the internal market" and introducing a de minimis safe harbour for small subsidies. However, these adjustments do not address fundamental issues. On core principles concerning evidentiary standards and procedural balance, the Guidelines substantively entrench and refine the Commission's extensive discretionary powers. If applied inappropriately, this will create severe legal uncertainty, disproportionate compliance burdens, and potential discriminatory effects for all enterprises operating in the EU, including Chinese companies. We express serious concern regarding this development.

We focus on the following five key systemic risks arising from the Guidelines, particularly their potential profound impact on Chinese enterprises:

First, the "call-in mechanism" grants excessive discretion and is improperly linked to industrial policy objectives. The Commission may initiate a review based merely on a "suspicion" (para. 168) and may treat involvement in "strategic economic activities" as a core consideration (para. 174(b)). This could inappropriately embed non-competition policy objectives, such as economic security, into a competition tool. It could effectively turn this power into a Sword of Damocles over Chinese enterprises, which could potentially lead to intervention in transactions or public procurement bids involving strategic assets, even if their size appears limited.

Second, the distortion assessment exhibits a tendency towards a presumption of distortion. The Guidelines permit the "combined assessment" of multiple foreign subsidies (para. 40) and set the threshold for finding a negative effect at proving a subsidy "contributes to" such harm (para. 41). This logic effectively shifts the burden of proof onto companies, constituting a systemic risk for enterprises with complex structures or those that have benefited from industrial policy support.

Third, the "cross-subsidisation" analysis relies excessively on theoretical presumption. The analytical framework (paras. 21-22) states an unfavourable finding may be reached if "no credible legal or economic factors exist which prevent or render unlikely that transfer" (para. 22). This risks relying on presumption over positive evidence, potentially leading to normal intra-group arrangements at arm's length being inappropriately scrutinised.

Fourth, an imbalance in the burden of proof in assessing an "unduly advantageous" tender. The methodology (paras. 88, 92) could create an imbalance by expecting an economic operator to demonstrate that the advantage of its bid is "plausibly justified by factors other than the foreign subsidy". This imposes an unreasonable evidentiary burden, approaching a requirement to prove a complete absence of any link.

Fifth, a lack of procedural safeguards and practical standards for the "balancing test." The requirement that positive effects must be "specific to" the subsidy (para. 118) may be unworkable in complex cases. Procedural rules (para. 144) state that the Commission "is not obliged to take into account" submissions received after a set period, which may limit the right to an effective defence, as late submissions may not be considered.

In summary, the FSR Guidelines could present a systemic challenge. The core risk lies in their interpretation and enforcement. We are deeply concerned that if these flaws are not corrected, the FSR risks exerting an undue "coercive effect" on Chinese enterprises' investments, participation in public procurement, and wider business operations in the EU.

The CCCEU emphasises aresolute call for a fair, transparent, and non-discriminatory rules-based system. We hope the European Commission will adhere to the following principles in its future enforcement: base decisions on positive evidence; restore a balanced burden of proof; ensure substantively effective procedural rights; and exercise discretionary powers with restraint, strictly limiting the FSR to its objective of preserving fair competition.

The cornerstone of a globally competitive EU market is predictable rules and fair enforcement. We look forward to sustained dialogue to refine implementation, thereby contributing to the robust development of China-EU investment and trade relations.